Economics

Monday, December 21, 2016

Regular readers of theSocialist
Standardwill
be familiar with theCooking
the Bookscolumn
which usually comprises of two succinct separate articles
each month dealing with economic matters in an accessible
way for the general reader. Read >

__________________________

Friday, August 02, 2013

“The policy advice economists draw from their theories is never
“value-neutral” but foists their values, dressed up to look like
objective science, on the rest of us. Take, for example, free trade. In
judging its desirability, economists weigh projected costs and benefits,
an approach that superficially seems objective. Yet economists decide
what enters the analysis and what gets ignored. Such things as savings
in wages or transport lend themselves easily to measurement in monetary
terms, while others, such as the social disruption of a community, do
not. The mathematical calculations give the analysis a scientific
wrapping, even when the content is just an expression of values. Similar
biases influence policy considerations on everything from labor laws to
climate change...

...Most economists, for instance, see the weakening of trade unions in
the U.S. and other Western nations in the past few decades as a good
thing, because unions’ monopoly power over wages impairs companies’
ability to adapt to the demands of the market. As Acemoglu and Robinson
point out, however, unions do a lot more than influence the supply and
cost of labor. In particular, they have historically played a prominent
role in creating and supporting democracy, in limiting the political
power of corporations, and in mitigating income inequality...

...There’s a real danger in seeing economics as an objective science from which all values have been stripped..."

The article’s author seems unusually reluctant to state the obvious and explain that economics is the field of class war.

One of the textbook definition of economics is along the lines of the
study of how societies use scarce resources to produce and distribute
goods and services. Paul Samuelson in his Economics, in a very widely
studied economics textbook, speaks of a "large scarcity" and says that
if goods were not scarce then there would be no role for a science of
economics. That's one definition of economics and, clearly, on it,
"economics" will have existed since the Stone Age and before and will
still exist in socialism. But that's not how Marxian socialists have
traditionally defined it. Most people wouldn't regard the term
"socialist economy" as a contradiction, but that would probably be
because they envisage "socialism" as having the familiar features of
today's "economy", i.e. production for the market, monetary incomes,
etc. This is not how Marx and many in the Marxist tradition would
describe socialism. For instance, in her series of lectures later
published as What is Economics? Rosa Luxemburg concludes that it is the
study of the impersonal economic laws that come into operation as if
they were natural laws when there is generalised production for sale on a
market with a view to profit. The subject of "economics" is "the
economy" that comes into being under these conditions.

In other words, "economics" is not the study of the production and
allocation of resources as such but the study of this when there is an
"economy". Economics only arose with capitalism, as in previous
societies, where there was production and distribution (and, in most,
exploitation) for direct use, there was no need for a special branch of
science to study this: it was transparent. For the same reason, there
will be no role for "economics" in socialism, precisely because
socialism won't be an economy.

When we criticise "economics" it is its claim to be studying eternal
facts of human existence, instead of just what happens at the present,
capitalist stage of human social development. On this definition where
there are no markets there is nothing to study.

At its very core—indeed in its first principle—conventional economics is
anti-socialist. It justifies both its own existence and capitalism's on
the basis that resources in society will always be scarce. Not only
this, it postulates that wants are somehow limitless too, ensuring an
irreversible tendency for demand in society to exceed supply without the
guiding hand of the price mechanism to ensure some sort of equilibrium.
In taking this position, economics reveals itself to be the ideological
discipline it really is, distorting any meaningful definition of the
word "scarce" (which, like dictionary definitions, would stress its
relative nature, that is, resources in relation to needs) in favour of
abstract absolute concepts like scarcity existing at any point when
resources aren't infinite. It is from this entirely bogus philosophical
construction that economics deduces that abundance is impossible, and
that so, therefore, is socialism.

As the problems of capitalism have proved to be so remarkably
intractable, so economics has seen its practitioners splinter into
opposing camps offering conflicting analysis and advice. Even if the
fundamental propositions of mainstream economics have been the same over
time, the precise theories advanced by economists at any given point
have sometimes varied markedly from those considered so useful in other
periods. Indeed, it is because conventional economic theories have
proved to have been such failures that they have been picked up and then
dropped to be replaced by something else with such monotonous
regularity. Economists do not appear to have any new theories left,
just—at best—remixes of old ones. In the century now passing,
protectionism, free trade, land taxes, social credit, currency
inflation, currency deflation, rearmament, Keynesianism, the "welfare
state", nationalisation, indicative planning, privatisation and
monetarism have all at some point been advocated by large numbers of
economists as the solution to the economic problems of the time. The
mind of capitalist economists is dogged by determination to show that
the market system works, and the unshakeable belief that the
consequences within the market economy are the result of mistaken or
otherwise conscious decisions of the actors within the economy.

Economics is the study of the factors governing the production and
distribution of wealth under the market system of production for profit.
Socialism will re-establish conscious human control over wealth
production; therefore, socialism will abolish capitalism’s economic laws
and so also ‘the economy’ as the field of human activity governed by
their operation. Hence socialism will make economics redundant.

If humans are involved, ideology is involved. Economists are humans, and
are not non-ideological beings, but are products of our class-divided
society. No matter how they dress their ideology in pseudo-scientific
objectivism, economists cannot square a circle.

Monday, March 24, 2008

One interesting feature in "the Independent" newspaper is its You Ask the Questions column. Joseph Stiglitz was "grilled" in the latest. For example:

What are the implications of recent economic developments for the teaching of economics?

John Baxter

London N1

The
idea that markets are "self adjusting," that free, unfettered markets
lead as if by an invisible hand to the well being of all, has been
repeatedly refuted (the Great Depression was the most telling
refutation). But it is a lesson that has to be learnt over and over
again.

The challenge is to get the right balance between markets
and government, to get the right form of regulation that allows for
innovation – but not the kind of financial innovation that we have just
seen. Instruments that were supposed to reduce risk actually increased
it.

Stiglitz is a Nobel Laureate in Economics. That's worth
noting; economics is regarded as being as scientific as chemistry,
medicine and physics! (Maths has to make do with the Fields Medal.) Marx
called the subject "political economy" - it is far more apt as it shows
economists are really peddlers of ideological mumbo-jumbo. As an
editorial in "the Economist" from 2nd June 1973 put it (quoted in the SPGB pamphlet on Marxian Economics)

If
economists today took more trouble to explain in simple language what
they are trying to prove and what relevance it might have, the gulf
between theory and practice might be closed somewhat. As it is, more and
more economists fill more and more pages of learned journals with an
endless stream of ill-written, verbose, half-baked mumbo jumbo which has
as much value to policy makers as the chattering of starlings.

Stiglitz's
answer is an explicit attack on standard, free-market economics. The
market, argue some defenders of capitalism, possesses this "invisible
hand", which secures prosperity and democracy for all; the concept dates
back to Adam Smith.

Quite what he has in mind on the right
balance between market and government is not clear. History has shown
Keynesian economics to be just as big a failure.

Friday, June 03, 2016

The Stavros Center promotes “Common Sense Economics,” a
free-market-focused book coauthored by the director of the Stavros
Center, James Gwartney, and accompanying course materials for economics
teachers all the way down to the kindergarten level. The center, along
with programs at other colleges and universities, hosts workshops for
teachers who want to offer Common Sense Economics courses at their
schools. Under “Readings Reflective of Common Sense” on the “Fun
Readings” page of the Common Sense Economics website, one probably
not-so-fun selection sticks out. “Sacrificing Lives for Profits,”
written by Common Sense Economics coauthor Dwight Lee, actually argues
that we’d all be better off if companies cut corners, even risking
customers’ lives, in the name of profit:

"The charge that sways juries and offends public sensitivities … is that
greedy corporations sacrifice human lives to increase their profits. Is
this charge true? Of course it is. But this isn’t a criticism of
corporations; rather it is a reflection of the proper functioning of a
market economy. Corporations routinely sacrifice the lives of some of
their customers to increase profits, and we are all better off because
they do. That’s right, we are lucky to live in an economy that allows
corporations to increase profits by intentionally selling products less
safe than could be produced. The desirability of sacrificing lives for
profits may not be as comforting as milk, cookies and a bedtime story,
but it follows directly from a reality we cannot wish away."

Lee gives the example of expensive safety features in cars. With
cheaper, less safe cars, he argues, consumers would be free to spend
more money on education and health care. The longer life expectancy that
comes with more education and health care, he thinks, far outweighs the
occasional traffic death due to dangerous automobiles.

The Kick It Over Manifesto

That you, the teachers of neoclassical
economics and the students that you graduate, have perpetuated a
gigantic fraud upon the world.

You claim to work in a pure science of
formula and law, but yours is a social science, with all the fragility
and uncertainty that this entails. We accuse you of pretending to be
what you are not.

You hide in your offices, protected by your
jargon, while in the real world forests vanish, species perish, human
lives are ruined and lost. We accuse you of gross negligence in the
management of our planetary household.

You have known since its inception that your
measure of economic progress, the gross domestic product, is
fundamentally flawed and incomplete, and yet you have allowed it to
become a global standard, reported day by day in every form of media. We
accuse you of recklessly supporting the illusion of progress at the
expense of human and environmental health.

You have done great harm, but your time is
coming to its close. The revolution of economics has begun, as hopeful
and determined as any in our history. We will have our clash of
paradigms, we will have our moment of truth, and out of each will come a
new economics — open, holistic, human scale.

On campus after campus, we will chase you old
goats out of power. Then, in the months and years that follow, we will
begin the work of reprogramming the doomsday machine.

Education in the Name of Social Transformation - Teaching Workers by MICHAEL D. YATES

Karl Marx’s famous dictum sums up my teaching philosophy: “The
philosophers of the world have only interpreted the world in various
ways; the point is to change it.” As I came to see it, Marx had
uncovered the inner workings of our society, showing both how it
functioned and why it had to be transcended if human beings were to gain
control over their lives and labor. Disseminating these ideas could
help speed the process of human liberation. From a college classroom, I
thought that I could not only interpret the world, I could indeed change
it.

Thinking is one thing; the trick is bringing thoughts to life. How,
actually, does a person be a radical teacher? How, for example, can
students be shown the superior insights of Marxian economics in classes
that have always been taught from the traditional or neoclassical
perspective—taught, in fact, as if the neoclassical theory developed by
Adam Smith and his progeny is the gospel truth? My college expected me
to teach students the “principles” of economics: that people act
selfishly and independently of one another, that this self-centeredness
generates socially desirable outcomes. And further, that
capitalism, in which we, in fact, do act out of self-interest, is
therefore the best possible economic system. Had I refused to do this
and taught only Marxian economics, I doubt I could have kept my job.

My students were mostly the children of factory workers, miners, and
other laborers, just the young people I wanted to reach and move to
action. However, nearly all of them were hostile to radical
perspectives, having been taught that such views were un-American. Their
animosity was sometimes palpable, especially when I pointed out the
many things they did not know about our country’s unsavory relationships
with the rest of the world. A retired Marine told me that, after we
watched a particularly radical film about U.S. imperialism, he wanted to
come down the aisle and strangle me.

My own timidity also made it difficult for me to advocate
revolutionary ideas. The neoclassical way of thinking has a strong hold
on those who have taken the time to learn it. It is elegant, precise,
mathematical. I was half afraid that the neoclassical theory would prove
capable of addressing the questions that I believed only radical
economics could answer. I gave it a legitimacy it didn’t deserve.

So I proceeded in a cautious manner, focusing at first on what
economists call “market failures.” These occur when the egotistic
pursuits of the market’s buyers and sellers do not lead to socially
desirable results. An example is ecological destruction. In a “free”
market, companies have strong incentives to wreak havoc on nature.
Because it is often costless for them to pollute, that is what they do,
shifting the damage caused by their production onto others, who suffer
higher health expenses, foul air, and dirty water. Since the market does
not respond to our need for a livable environment, it fails socially,
making it necessary for the government to compel the polluters to behave
in a publicly responsible way. Discussions of market failures allowed
me to show my students that a capitalist economic system has to be
regulated by the government if it is to satisfy human needs.

The problem with this tactic was that it led to a liberal and not a
radical advocacy. My growing hostility to capitalism demanded more than a
liberal critique. My next strategy was to pit the neoclassical and the
radical theories directly against one another. I pointed out that
economists did not agree on what made capitalist economies tick. I
explained the neoclassical theory as objectively as possible. I then
used the market failures to develop a criticism of mainstream economics,
especially the notion that the government is a neutral entity that acts
to regulate the market to the benefit of society as a whole. Once I
suggested that the weight of money in politics made this unlikely, it
was easy to switch gears and enter into an examination of Marxian
economics.

This comparison approach also proved unsatisfactory. The neoclassical
theory is difficult for students to learn, so I had to spend too many
hours analyzing it, leaving not enough time for the radical model.
Therefore, I did two things. I simply stopped teaching the neoclassical
mainstays, called micro and macro- economics, freeing me to develop new
courses. This was possible because I now had tenure and was the senior
teacher in my division. I taught the Political Economy of Latin America,
a subject amenable to a radical analysis and one in which there is a
large body of literature rooted in the political economy of Marx. I also
developed a set of courses in labor relations built on the supposition
that there is an inherent conflict between employees and their
employers, rooted in the nature of our economic system. In these
classes, the only theoretical constructs employed were those of Marx and
his modern adherents.

For a decade, teaching radical economic ideas pleased me, but then
disillusion set in. In the early 1980s, the steel mills in Johnstown,
Pennsylvania, where I taught, began to close. Workers were forced to
leave the area, and as a result, my working class students disappeared.
Teaching kids who were the first in their families to attend college, as
I had been, had made my efforts seem worthwhile. I got along well with
them, even those who disagreed with me. I managed to radicalize some.
Unfortunately, the college began to replace the locals with middle-class
teenagers from the Pittsburgh suburbs. They seemed to me like alien
beings, so unconcerned with learning that they appeared proud of their
ignorance. To make matters worse, the student revolt of the 1960s had
generated a counterattack by the leaders of business (who dominate the
schools to a degree seldom examined or understood) and government. The
humanities and social sciences began to lose ground to career-oriented
fields of study; soon, business and technical programs proliferated.
These changes, which coincided with the collapse of the post-Second
World War economic boom, created understandable fears among young
people, who were easily persuaded to view education as an investment in
their “human capital,” and major in something practical.

Disinterested students and a reactionary political situation on
campuses made me wonder what useful purpose teaching undergraduates
served. Perhaps advocating radical ideas in college classrooms was not a
radical act. It would not push the society toward greater
egalitarianism and more control over the economy by ordinary people.
Certainly, creating a new world was the furthest thing from my students’
minds. Nothing I could say would change them very dramatically.
Compounding matters was the growing match between a much more
conservative ideological climate and the recently hired faculty. Most
were too cowed by authority and fearful that dissent would impact their
careers negatively to do anything except keep their noses to the
grindstone. A few said they would make trouble once they got tenure, but
none ever did.

Economic necessity compelled me to continue teaching, but conscience
forced me to do more. I had never confined myself solely to the
classroom; I had helped the maintenance and custodial workers at my
college to form a labor union and tried valiantly to get the faculty to
follow suit. However, now the campus was not enough, so in 1980, I began
educating working people, in a Labor Studies program at Penn State
University. The first classes were held in Johnstown, but eventually, I
taught throughout Western Pennsylvania and occasionally in Ohio, with
venues in union halls, schools, and motels. Classes were noncredit,
typically meeting for three hours on a weekday evening. My students did
every kind of work: steelworkers, postal clerks, mail carriers, oil
workers, chemical plant laborers, autoworkers, coal miners, secretaries,
librarians school teachers, firefighters, nurses, plumbers, operating
engineers, bricklayers, carpenters, machinists, glass workers, and many
more.

These early forays into worker education soon led to others. Sometime
in the late 1990s, I was asked to teach a class in a graduate (Masters)
program at the University of Massachusetts, one aimed at union members,
mainly officers and staff persons. Then, in 2001, I left my college
teaching job, and Karen and I began an itinerant life, moving around the
United States. However, labor education remained a part of my work.
Besides the graduate class, I taught in an undergraduate Labor Studies
program in Manhattan and online labor courses for a community college
and several universities. Today, I only do the MA class, each January
for two weeks. I abandoned the online work when it stopped being devoted
solely to labor-oriented students or came to be used as a way to
exploit cheap labor and get rid of regular classroom faculty.

There are many things I have enjoyed about labor education. The
students often have been like the people with whom I grew up; the older
students sometimes reminded me of my father and his factory workmates.
All of them have had job experience and so understood work better than
my college students. When I talk about the labor law or unemployment,
they bring interesting personal experiences to the discussions. What I
teach has immediate practical relevance to them, and I can use this to
get them to understand more complex and abstract economic and political
ideas. For example, I once taught collective bargaining to a group of
men working in a plant that made air conditioners. They had been forced
by their international union to make concessions during the term of
their collective bargaining agreement. They videotaped the classes and
showed the tapes to co-workers. Then they ran a slate of candidates in
their local union elections and won office. Using what they had learned,
they successfully negotiated the return of the wages and benefits they
had been compelled to concede. One of the new officers went on to get a
masters’ degree in labor relations and then taught in the same program
in which I had worked. These classes sometimes have been catalysts for
the rebuilding of long dormant local labor movements, and they have
raised the consciousness of the students.

Although many of my early worker students had not graduated from
college and were often rank-and-file union members, they grasped radical
ideas more quickly and deeply than did my college pupils. This is
because these had a greater usefulness to them, and they perceived the
arguments through the lenses of working people’s eyes. Two examples come
to mind. In a class in labor economics, we were discussing the
differences between the neoclassical and the Keynesian theories of
unemployment. After two three-hour classes, one of the students wrote a
prize-winning essay on the subject for his local union newspaper. In a
class in labor law, we were examining the Fourth Amendment to the
Constitution in the context of employee drug testing. At my college,
most students took it for granted that employers have the right to
randomly drug test employees. They had been so thoroughly indoctrinated
that they did not think of the issue in terms of civil liberties. The
workers, on the other hand, argued vehemently against drug testing under
any circumstances. Most of them said that they would refuse, as a
matter of principle, to be tested.

The men and women in the MA program do have college degrees, and they
are typically union officers or staff persons. I encourage them to take
what they have learned and teach their members. Unions have done a
woeful job of educating the rank-and-file, not least because union
leaders often fear an educated membership that might turn against them.
Here again, there have been successes. Students have organized classes
in their union locals; one offered a bilingual course so that
Spanish-speaking immigrant laborers could attend, and another prepared
labor history sessions for newly-apprenticed carpenters in Manhattan.

All of this is not to say that my worker students have been perfect.
Far from it. They have been subjected to the same kind of conservative
advocacy from family, media, teachers, and employers to which all of us
have been exposed. Racism, sexism, and homophobia have reared their ugly
heads. Not all have been happy with my radical views, although there
has been a remarkable transformation over the past two decades in the
willingness and eagerness with which almost all have entertained—and
many have embraced—a radical analysis of capitalism.

Teaching workers has been education as I envisioned it when I first
entered the classroom forty-four years ago: students coming to class
voluntarily, enthusiastically participated in their learning, and then
going out to apply what they have learned to their lives. They
appreciate my commitment to teaching; applause and gifts at the end of a
course have been common. And I found that these were students from whom
I could learn new things as well. My labor education classes have
inspired me to write several books, all of which are aimed at the
general working public. Through these, I have made contact with
working-class groups around the country and have had the opportunity to
give talks, conduct seminars, and help in union-organizing campaigns. I
often get requests from working people asking for my help in legal or
economic matters. Nothing comparable happened in my college classes.

The best thing about teaching workers is that I have not had to abide
or feel pressured by the canons of academe. I have not had to worry
that my students will not know what is expected of them when they take
intermediate-level courses. Each labor class is self-contained, with no
prerequisites. I do not have to maintain a false air of objectivity. I
do not have to say, for example, that economists disagree about how
capitalism works; instead, I can say what I believe, forthrightly, that
the neoclassical theory represents the economics of the employing class
and that the attempt to make it into something else, a set of universal
truths, is propaganda. I can posit a radical explanation of capitalism.
This has been invariably well received, even when in 1980s Johnstown, I
had to call Marx’s analysis of capitalism the “workers’ theory” to avoid
charges of being a communist. The idea that profits arise out of the
unpaid “surplus” labor time of workers resonates because it fits with
the actual work experiences of the students; it helps them to understand
what they are, what forces and persons are responsible for their
circumstances, and what they might do to combat them. Similarly, when I
begin a discussion of our labor power as a commodity, we soon enough
conclude that to our employers we are mere costs of production, to be
minimized by whatever means necessary. It is but a short step to have
everyone agree that workplaces are war zones and that only collective
struggle has any chance of victory. In the worker classrooms, we can
openly address such matters, and I can be the radical advocate I think I
must be.

In the college classroom, I taught as I did because the college was
structured so that a more honest and direct approach was impossible.
Academe, by its nature, limits, constrains, absorbs, or punishes direct
radicalism. And if it does allow some radical advocacy, the “higher
learning” is so far removed from the lives of working people that this
is bound to have little social impact. It will not help to move society
in an egalitarian and democratic direction. Worker education, on the
other hand, offers much greater possibilities, precisely because it is
directly connected to the lives of the working class majority, who, in
the end, must be the moving force of social transformation.

I don’t know how much longer I will be a labor educator. It is hard,
time-consuming, and mentally and physically draining work. Guilt has
probably kept me at it these past few years. There is an extraordinary
shortage of people trained in economics who could effectively teach the
working class. And among those few who could, hardly anyone wants to do
so. I have urged radicals to teach workers whenever an opportunity
presents itself. My pleas have been met always with a deafening silence.
We hear a lot these days of the rise of a new core of young left-wing
intellectuals, well educated, attuned to Marx, and alienated from
bourgeois society. It is to be hoped that they will not only advocate
for radical change in their magazines, blogs, and essays, but will
embrace the working class, embed themselves in it and write and act, for
workers, with workers, as workers, educating those who toil as they
educate themselves. We all do what we can to make a better world. But
those with knowledge have a duty to spread the word directly to those
without whose struggles no such world will ever come to be. I have tried
my best. Maybe now it is time for those younger and more energetic to
take my place.

Michael D. Yates is the Editorial
Director of Monthly Review Press. He can be reached at
mikedjyates@msn.com. He welcomes comments.

Saturday, June 08, 2013

Cameron is to attend the 61st Bilderberg meeting taking place in
Hertfordshire, UK. A total of around 140 participants from 21 European
and North American countries have confirmed their attendance. As ever, a
diverse group of political leaders and experts from industry, finance,
academia and the media have been invited. Founded in 1954, Bilderberg is
an annual conference designed to foster dialogue between Europe and
North America. Every year, between 120-150 political leaders and experts
from industry, finance, academia and the media are invited to take part
in the conference. About two thirds of the participants come from
Europe and the rest from North America; one third from politics and
government and the rest from other fields.

The conference has always been a forum for informal, off-the-record
discussions about megatrends and the major issues facing the world.
Thanks to the private nature of the conference, the participants are not
bound by the conventions of office or by pre-agreed positions. As such,
they can take time to listen, reflect and gather insights. There is no
detailed agenda, no resolutions are proposed, no votes are taken, and no
policy statements are issued.

Friday, February 07, 2014

In 1980, the average large corporation CEO’s salary was 50 times that of
the average worker. Today that number is anywhere between 250 to 1,000.
As companies grew, the workers have not shared in the growth. What is
called "Trickle Down" economics, a.k.a "Supply Side Economics" In the
late 1800s they had an earthier name for it - "Horse and Sparrow"
economics. If the horse eats enough oats, eventually there will be some
oats on the road for the sparrows to pick over. It has proven to not
work, at least for 90 percent of Americans.

Through the post-World War II era, the top one percent earned 10 percent
of all income. By 2007, that figure had jumped to 23.5 percent, the
most since 1928.

Some others like to say that "a rising tide lifts all boats." In other
words, if an executive makes $20 million a year, his income will
eventually trickle down into the rest of the economy and ultimately
benefit poor people.

But that theory hasn't exactly proven true, either. The highest-earning
20 percent of Americans have been making more and more over the past 40
years. Yet no other boats have risen; in fact, they're sinking. Over the
same 40 years, the lowest-earning 60 percent of Americans have been
making less and less.

Whether we want to admit it or not, what does NOT work is not some sort
of economic system be it this system of that system, etc. What does no
work is the money/profit system itself. If we, as a species, get rid of
money, this planet has a chance of making it; if we do not, we don't
have a chance.

Monday, December 16, 2013

In science, a theory is abandoned or substantially modified if it does
not concur with the emerging facts, fails to predict important events,
or is contradicted by experiments. That, alas, does not seem to apply to
economic theories.

Capitalism has experienced the second largest economic crisis in
history, after the great depression of the 1930s. You would think,
wouldn’t you, that those high priests of economics would now be
contrite, admit that their models of the market and human behaviour are
wrong, or at least are in need of serious modification. Not a bit of it,
they just carry on regardless, as if the crash never happened.

Economics undergraduates at the University of Manchester are so
disappointed with their courses that they have formed a “post-crash
Society”, and have established links with other universities, with the
aim of forcing academics to explore other economic models outside the
free-market brand that dominates their economics courses. The students
are critical, rightly, that their courses have failed to explain the
causes of the crash, and why the models failed to predict it.

The word ‘free’ in free-market or free enterprise is a misnomer. The
state came to the rescue of the too-big-to-fail banks to the tune of
hundreds of billions of pounds, only to see millions of that money paid
in bonuses to the very architects of the crisis in the first place.
Governments then had to cut their spending through austerity programmes
that affect almost everyone, apart, that is, from those who caused the
crash in the first place. The hardships and the misery of such cuts are
particularly felt by the working poor, the disabled, and the vulnerable.
As for the word ‘neo-liberal’, all it means is giving the super-rich
the liberty to exploit people and to pay them poverty wages.

Oblivious to the real world, Ha-Joon Chang, a Cambridge University
economist, in his book ‘23 Things They Don’t Tell You about Capitalism’,
emphasizes his enthusiastic support of capitalism, and frames his
criticism of the free-market model with these words:
“Being critical of free-market ideology is not the same as being against
capitalism. Despite its problems and limitations, I believe that
capitalism is still the best economic system that humanity has invented.
My criticism is of a particular version of capitalism that has
dominated the world in the last three decades, that is, free-market
capitalism. This is not the only way to run capitalism, and certainly
not the best, as the record of the last three decades shows.”

Noam Chomsky, in an interview reported in Truthout answers:
“The basic explanation is the usual one. It is all working quite well
for the rich and powerful. In the US, for example, tens of millions are
unemployed, unknown millions have dropped out of the workforce in
despair, and incomes as well as conditions of life have largely
stagnated or declined. But the big banks, which were responsible for the
latest crisis, are bigger and richer than ever, corporate profits are
breaking records, wealth beyond the dreams of avarice is accumulating
among those who count, labor is severely weakened by union busting and
“growing worker insecurity,” … So what is there to complain about?”

The free-market or neo-liberalism is not a broken model of capitalism -
it is capitalism. As long as economists support capitalism they will
continue to be required to create explanations and apologies for its
failures without fundamentally questioning it.

An obsession with growth has eclipsed
our concern for sustainability, justice and human dignity. But people
are not disposable – the value of life lies outside economic development

Limitless growth is the fantasy of economists, businesses and
politicians. It is seen as a measure of progress. As a result, gross
domestic product (GDP), which is supposed to measure the wealth of
nations, has emerged as both the most powerful number and dominant
concept in our times. However, economic growth hides the poverty it
creates through the destruction of nature, which in turn leads to
communities lacking the capacity to provide for themselves.

The concept of growth was put forward as a
measure to mobilise resources during the second world war. GDP is based
on creating an artificial and fictitious boundary, assuming that if you
produce what you consume, you do not produce. In effect , “growth”
measures the conversion of nature into cash, and commons into
commodities.

Thus nature’s amazing cycles of renewal
of water and nutrients are defined into nonproduction. The peasants of
the world,who provide 72% of the food, do not produce; women who farm or
do most of the housework do not fit this paradigm of growth either. A
living forest does not contribute to growth, but when trees are cut down
and sold as timber, we have growth. Healthy societies and communities
do not contribute to growth, but disease creates growth through, for
example, the sale of patented medicine.

Water available as a commons shared
freely and protected by all provides for all. However, it does not
create growth. But when Coca-Cola sets up a plant, mines the water and
fills plastic bottles with it, the economy grows. But this growth is
based on creating poverty – both for nature and local communities. Water
extracted beyond nature’s capacity to renew and recharge creates a
water famine. Women are forced to walk longer distances looking for
drinking water. In the village of Plachimada in Kerala, when the walk
for water became 10 kms, local tribal woman Mayilamma said enough is
enough. We cannot walk further; the Coca-Cola plant must shut down. The
movement that the women started eventually led to the closure of the
plant.

In the same vein, evolution has gifted us
the seed. Farmers have selected, bred, and diversified it – it is the
basis of food production. A seed that renews itself and multiplies
produces seeds for the next season, as well as food. However,
farmer-bred and farmer-saved seeds are not seen as contributing to
growth. It creates and renews life, but it doesn't lead to profits.
Growth begins when seeds are modified, patented and genetically locked,
leading to farmers being forced to buy more every season.

Nature is impoverished, biodiversity is
eroded and a free, open resource is transformed into a patented
commodity. Buying seeds every year is a recipe for debt for India’s poor
peasants. And ever since seed monopolies have been established, farmers
debt has increased. More than 270,000 farmers caught in a debt trap in
India have committed suicide since 1995.

Poverty is also further spread when
public systems are privatised. The privatisation of water, electricity,
health, and education does generate growth through profits. But it also
generates poverty by forcing people to spend large amounts of money on
what was available at affordable costs as a common good. When every
aspect of life is commercialised and commoditised, living becomes more
costly, and people become poorer.

Both ecology and economics have emerged
from the same roots – "oikos", the Greek word for household. As long as
economics was focused on the household, it recognised and respected its
basis in natural resources and the limits of ecological renewal. It was
focused on providing for basic human needs within these limits.
Economics as based on the household was also women-centered. Today,
economics is separated from and opposed to both ecological processes and
basic needs. While the destruction of nature has been justified on
grounds of creating growth, poverty and dispossession has increased.
While being non-sustainable, it is also economically unjust.

The dominant model of economic
development has in fact become anti-life. When economies are measured
only in terms of money flow, the rich get richer and the poor get
poorer. And the rich might be rich in monetary terms – but they too are
poor in the wider context of what being human means.

Meanwhile, the demands of the current
model of the economy are leading to resource wars, oil wars, water wars,
food wars. There are three levels of violence involved in
non-sustainable development. The first is the violence against the
earth, which is expressed as the ecological crisis. The second is the
violence against people, which is expressed as poverty, destitution and
displacement. The third is the violence of war and conflict, as the
powerful reach for the resources that lie in other communities and
countries for their limitless appetites.

Increase of moneyflow through GDP has
become disassociated from real value, but those who accumulate financial
resources can then stake claim on the real resources of people – their
land and water, their forests and seeds. This thirst leads to them
predating on the last drop of water and last inch of land on the planet.
This is not an end to poverty. It is an end to human rights and
justice.

Nobel-prize winning economists Joseph
Stiglitz and Amartya Sen have admitted that GDP does not capture the
human condition and urged the creation of different tools to gauge the
wellbeing of nations. This is why countries like Bhutan have adopted the
gross national happiness in place of gross domestic product to
calculate progress. We need to create measures beyond GDP, and economies
beyond the global supermarket, to rejuvenate real wealth. We need to
remember that the real currency of life is life itself.

Dr. Vandana Shiva is a
philosopher, environmental activist and eco feminist. She is the
founder/director of Navdanya Research Foundation for Science,
Technology, and Ecology.

Tuesday, October 16, 2012

Sometimes the Nobel Prize for Economics is awarded to someone who has
made a useful contribution rather than providing ideological
justification for some government policy within capitalism.

For
instance, in 1998 it went to Amartya Sen whose work had shown that
famines are not caused by an absolute shortage of food but by a collapse
in the ability of some people to buy or exchange something for food. In
2009 it went to Elinor Ostrom, whose research exposed the myth of “the
tragedy of the commons” by showing that in practice where commons
existed they had been managed by the community and did not break down
through the self-defeating selfish behaviour of those have access to
them.

This year this prize has between awarded to two people,
one of whom denies that he is an economist, for the study of
transactions “where price is not an issue”. Something that could be
socially useful as socialism will be a society where price won’t be an
issue

According today's the Times:“Their
studies helped to improve efficiency in markets where price was not an
issue, matching doctors to hospitals, students to dorm rooms and organs
to transplant patients.It led ultimately to the creation of kidney
exchanges, where donors could save a relative even where there was no
biological match. In essence, a husband wanting to save his wife by
donating a kidney but whose blood is not compatible instead donates to a
stranger, whose own relative donates back to the man's wife.Such
matching arrangements are essential in most Western countries where
organ-selling is illegal, and the free market cannot do the normal work
of resource allocation.”

and“Professor Shapley,
who is 89, began the theoretical spade-work in the 1950s and 1960s,
using game theory to analyse different matching methods. In the 1990s,
Professor Roth, now 60, working independently, applied similar theories
to more practical matters, helping to allocate student doctors to
particular hospitals and later providing the theoretical underpinning to
streamline organ donation. Professor Roth is regarded as an authority
on a field known colloquially as ‘repugnance economics’ — in essence,
the study of transactions where the application of the price mechanism
is regarded as morally repugnant, such as the sale of body parts, sperm
and eggs, prostitution and even dwarf-throwing.” "Repugnance economics", is that the socialist answer to the "Economic Calculation Argument" ?

Sunday, January 10, 2016

Janet had bought a sponge cake, added a lighted candle and, with a
couple of bottles of awful wine, had conjured up an office party for
Neb's sixtieth birthday party. 'Upstairs'—the Tribune's Group
Chairman—was "in residence", as the staff called it when the
multi-millionaire proprietor of the paper was in town for a few days and
making a nuisance of himself. Neb, whose nickname was derived from his
youthful days as a reporter when, it was said, he could smell a story,
enjoyed the intimacy of his colleagues, and even the contribution
'Upstairs' made, in the form of a patronising panegyric to the past
talents of his editor-in-chief, failed to impinge on his cheerful mood.

That was yesterday. The evening had brought the loneliness of his
five-year widowhood, concentrated, on this day, in the realisation that
the meaningful part of his life had been lived. Its milestones were
headlines, scoops and stories that, in his later years, had made his
comfortable face one of the better known, if unlabelled, countenances on
TV. In the pub, later, he reflected that ‘Upstairs’ was right; his
greatness was in the past. Grogan, his ambitious deputy, knew that, too;
it showed in his growing insolence and his readiness, now, to dispute
Neb's decisions. It was the newsman's moment of truth: the realisation
that he would never again by-line a story that would cause a TV producer
to ring his office. Death, he speculated abstractly, begins its run-in
by isolating its victims.

It was simply loneliness, a desire to be with, even anonymous others,
that brought him into the Lindsay Rooms, invited by the sign outside
that said someone who allegedly knew about these things was going to
speak about 'WORLD HUNGER AND ITS CAUSE’. His reporter’s mind scanned
the speaker’s voice, cogitated the over-burdening statistics and,
already he was seeing the words on the screen of his desk VDU—the words
that would combine in the most dramatic story he had ever written
because it encompassed what we saw as greed, crime and the needless
destruction of human life on a scale that beggared belief. Only briefly,
did his mind picture the interior of the Press Gallery television studio. No. Comfortingly, Neb experienced the desire to tell a story for its own sake; just to tell people.

He had not written it well. He knew that. The old journalistic tricks,
the catchphrases, the smart alliteration . . . he had discarded them as
they presented themselves. Vulgar. Lewdness in a graveyard. Probably the
most staid piece he had ever written. But what a story! What an
unsurpassed indictment of whatever it was that allowed this awful thing
to happen—to happen every single day!

Still, when he entered the conference room for the “shake-out”, as the
meeting that finalised the major content of the first edition of each
evening Tribune was known, he was dismayed to find ‘Upstairs’
ensconced in his, Neb’s, chair at the top of the long editorial table.
Grogan, pulsating energy, chatted obsequiously to the Chairman.

“What have we got?" Grogan always started the proceedings but. this
time, without looking at Neb, he took his cue from ‘Upstairs’. He
answered his own question: "Art's got the front lead, I think. It’s
costing, but with pictures, we’ll have a middle spread as well”. Janet
came into the room and automatically went to the top chair. ’Upstairs'
had the fax in his hand before she realised Neb was not in his usual
place. There was a deferential silence in response to the Chairman’s
raised hand. "This might be your lead, Neb: Sir Kenneth Cornell,
Chairman of Sprucefield—I knew him well—and three others killed . . .
Company jet, going to Glasgow".

Grogan spoke directly to ‘Upstairs’, "Art’s is good, Sir, the pop
singer. Melanie . . . pregnant. Claims she was screwed by one of the
royals’’.

"Here's our lead!", Neb’s voice cut through the muttered buzz of
vulgarity. It was a declaration and all heads turned expectantly. In the
silence, his voice grated and, as he read, he thought how differently
he would have written it if he had known the Chairman was going to be
there.

“Banner: 40,000 CHILDREN MURDERED BY ECONOMICS! Lead in: Yesterday
40,000 children died because economics—the way we organise production
and distribution in our world—could not afford about six thousand
pounds’ worth of food and medicine to keep them alive”. His eyes swept
around the table: the others were dumbfounded, staring. Desperately, in
an effort to get them to hear, he started paraphrasing his material.
"Yesterday, economics spent £220,000,000 worldwide on its armed forces
and armaments—it does that every day and every day it sacrifices
thousands of human lives to hunger. Economics destroys food . . . makes
the land legislatively barren to preserve market stability. There’s
nothing out there to equal the gravity of this daily crime . . .Wars . .
. Disasters . . . Royal screwings. There’s nothing to equal the gravity
of this crime". ’Upstairs' said, angrily, “Neb ", and limply he heard
himself saying: "For Christ's sake, we’re supposed to inform the public .
. ."

‘Upstairs’ slapped his palm noisily on the table. "Alright, Neb.
Alright! We’ll go up to my office”. He turned to Grogan. "That whore . .
. What's her name? Melanie? That’s a good lead story with the Royal
bit. I’ll give you material for an appreciation of Sir Kenneth. I just
can’t get over that terrible air tragedy—box it big on the front page”.

Neb got up from the table. He twisted the paper in his hand and threw it
into the wastepaper basket. He knew that was his last story.

Monday, November 11, 2013

Economics teaching at Britain's universities has come under fire from a leading academic
who accused lecturers of presenting "things that are known to be
untrue" to preserve theories that claim to show how the economy works.
The Treasury is hosting a conference in London to discuss the crisis in
economics teaching, which critics say has remained largely unchanged
since the 2008 financial crash despite the failure of many in the
profession to spot the looming credit crunch and worst recession for 100
years. Michael Joffe, professor of economics at Imperial College,
London, said he was disturbed by the way economics textbooks continued
to discuss concepts and models as facts when they were debunked decades
ago. He said many reformers had called for economics courses to embrace
the teachings of Marx and Keynes to undermine the dominance of
neoclassical free-market theories, but the aim should be to provide
students with analysis based on the way the world works, not the way
theories argue it ought to work.

Even though we are the longest surviving socialist party in the UK,
formed way back in 1904, not too many have heard of the Socialist Party
of Great Britain. It is rather a pity because across all those decades
as the British and world economy ebbed and flowed with its periodic
crises, the SPGB developed its analysis of recessions. For us worthwhile
social change cannot come about blindly in knee-jerk reaction to
events, nor in the role of passive bystanders as events unfold around
us. What has become crystal clear is the extent to which the experts of
capitalism, the self-styled "Masters of the Universe" possess little
idea what they were actually buying and selling. Genuine social change
will require more than just restricting executives' bonuses, or trying
to improve regulation of the financial services sector, as many are
calling for. Even when it is working right, even when it is booming, the
market system fails miserably to do the one thing it claims as its
unique selling point. Far from efficiently sending market signals
between supply and demand, between producer and consumer, the market
system sends confused, unreliable and skewed information. Capitalism
won’t collapse of its own accord. But for many millions it has never
functioned to start with. Instead the market system must be dismantled
intellectually, ideologically and democratically. A genuine alternative
society must be agreed before capitalism can start to be dismantled in
reality, with alternative mechanisms emerging to replace both the market
and the state.

Ahhh..We already hear some sighing....here it comes, yet another
out-of-date theory, compounded by the fact it is based upon the studies
of 19th century thinkers - Karl Marx and Frederick Engels which is then
even further confused by all the conflicting explanations, stemming from
their writings, leaving the “socialists” squabbling and feuding over
who possesses the correct party line. Over-Productionist,
Under-Consumptionists, Declining Rate of Profitists, all claiming the
authority of Marx and all vying for recognition since each theory means a
political policy to be promoted in the hope of implementation.
Therefore, the SPGB begs your patience and indulgence as we challenge
your existing and widely held accepted views.

Monday, May 09, 2016

Regular readers of theSocialist
Standardwill
be familiar with theCooking
the Bookscolumn
which usually comprises of two succinct separate articles
each month dealing with economic matters in an accessible
way for the general reader.

__________________________

2016

1. Osborne, Mao, Same Struggle

It was a good idea to twit
George Osborne about his new-found love for the
dictatorship in China to make the point that, when it
comes to finding markets and investment outlets, ideology
doesn’t matter. What does instead is the material,
economic interest of the capitalist class, and that
Osborne, as one of their governmental representatives,
served this interest on his recent visit to China, despite
it being a dictatorship and, to boot, one that (falsely)
claims to be socialist.Read
>

January

2. Capitalism Goes into Space

The Dutch Marxist, Anton
Pannekoek, once wrote that because the Earth’s size was
limited so would capitalism be, implying that when
capitalism had extended to the whole of the globe it would
come to an end. This conclusion might have been
reassuring, but it was never a rigorous argument. The
Earth’s size has nothing to do with the lifespan of
capitalism. But, if it had, Pannekoek had overlooked the
possibility of capitalism extending itself beyond the
Earth; surprising since he was a professor of astronomy,
but he was writing in 1942.>Read

1. A Parasite on Parasites

Harry Hyams, who died in
December, was one of the ‘unacceptable faces of
capitalism’ in the 1970s, though the then Tory Prime
Minister Edward Heath had coined the term in relation to
another ruthless capitalist. Hyams’ notoriety was based on
what he did with Centre Point, for a while the tallest
building in London, as described by his obituary in
theTimes (22 December):

‘Centre Point was completed in 1966
at a cost of £5.5 million. However, within seven years and
still without tenants, its value was estimated at £20
million. In an era of rapidly rising rents, it was worth
more as an unoccupied asset.’Read
>

February

2. But Who Owns the Machines?

‘STEPHEN HAWKING Says We Should Really Be Scared of
Capitalism, Not Robots’ wrote Alexander C Kaufman, the
Business Editor of the Huffington Post, last 8 October.
Hawking didn’t actually use the word capitalism but he
might as well have done:

‘If machines produce everything
we need, the outcome will depend on how things are
distributed. Everyone can enjoy a life of luxurious
leisure if the machine-produced wealth is shared, or
most people can end up miserably poor if the
machine-owners successfully lobby against wealth
redistribution. So far, the trend seems to be toward the
second option, with technology driving ever increasing
inequality.’Read
>

1. Swizz Banking?

Swiss banking reformers have
obtained the 100,000 signatures needed to initiate a
referendum to restrict bank lending or, as they put it, to
stop banks benefiting from being able to create electronic
money out of nothing.

Explaining the apparent logic behind
the proposal in the Financial Times (5/6 December), Martin
Sandhu wrote:

‘The bank decides whether it wants
to make you a loan. If it does, then it simply adds the
loan to its balance sheet as an asset and increases the
balance in your deposit account by the same amount (that’s
a liability for them). Voilà; new electronic money has
been created.’ Read
>

March

2. The Face of Capitalism

'I find it terrible that we
allow companies to behave like this', an unnamed Tory
minister told Times columnist, Rachel Sylvester (26
January) commenting on the Google tax row.
'It gives capitalism a bad name'. It's the 'unacceptable
face of capitalism' all over again (as if capitalism had
an acceptable one).

But those in charge of Google and
other corporations operating in many different countries
did nothing against either the economic logic or the legal
code of capitalism. Capitalism's economic logic is to
maximise the 'self-expansion of capital', i.e., to make as
much profit as possible to invest as more capital, and it
is the legal duty of those in charge of investing other
people's money to ensure that the investors get the
maximum return on their investment.Read
>

1. George Osborne, Paul Mason and
Marx

Speaking
in the House of

Commons on 1 March George
Osborne called the journalist and broadcaster Paul Mason a
‘revolutionary Marxist’.

To which Mason indignantly
replied: ‘As to Mr Osborne’s claim that I am
‘revolutionary Marxist’ it is completely inaccurate. I am
a radical social democrat who favours the creation of a
peer-to-peer sector (co-ops, open source, etc) alongside
the market and the state, as part of a long transition to
a post-capitalist economy. There’s a comprehensive
critique of Bolshevism in my latest book,Postcapitalism:
A Guide to Our Future.’ >Read

April

2.McDonnell’s
Mantra

Labour Shadow Chancellor John
McDonnell is apparently going around repeating the mantra
‘Investment, investment, investment’ as the solution to
the woes of British capitalism. Labour activist Michael
Burke wrote justifying this in Ken Livingstone’s online
Socialist Economic Bulletin on 25 February. He
started off well enough:

‘… contrary to George Osborne
(and those on the left who are confused and echo him) it
is not possible for consumption, or wages to lead
economy recovery.’ Read
>

1. When Supply Exceeds Demand ….

The capitalist class is not a
monolithic block with a single interest. They are united
of course in wanting capitalism to continue and a
government to enforce their ownership, but beyond that
it’s a mass of often conflicting sectional interests of
particular groups, industries and firms. An important role
of governments is to arbitrate between these conflicting
interests.

The current crisis in the British
steel industry is a case in point. Tata, the India-based
capitalist conglomerate which owned the Port Talbot
steelworks (which shows that capitalism is international
and that the Leninist theory that imperialist Britain
exploits capitalist India is nonsense – they’re all in it
together), wanted to dispose of it as it wasn’t making a
profit. In fact it was said to have been making a loss of
£1 million a day. No capitalist firm is going to put up
with that for long. Read
>

May

2. … and When Demand Exceeds
Supply

There is a housing shortage in
London. Or rather, paying demand for accommodation in
London exceeds supply for sale, which is not necessarily
the same thing. There are probably enough buildings in
London to house everybody, certainly enough so that nobody
need be homeless or live in accommodation without basic
amenities. The Times (12 April), for instance, reported:

‘A growing glut of luxury homes in
inner London could encourage developers to turn them into
offices, according to a report that says the total floor
space of top-end apartments in the pipeline would be
enough to cover Hyde Park.’

In the argument over whether to Leave or Remain in
the EU is in the better overall interest of British
capitalism, which the media and politicians are urging us
to get embroiled in, the Remain side would arguably seem
to have the stronger case – from a capitalist point of
view that is, of course.

British capitalism benefits from
unrestricted access to the single European market and also
from having a say in drawing up its rules and regulations.
It also benefits from being part of a large trading bloc
in negotiations with other states and blocs, on the same
principle behind trade unionism that ‘unity is strength’:
you can get a better deal when negotiating as a group
rather than individually.Read
>

June

2. Mises is Irrelevant

The 'Weekly Worker' (28 April) carried an
interesting article by the Trotskyoid Hillel Ticktin
which, unusually for someone from his political
background, gave a good description of socialism which
(also unusually) he called socialism:

‘A distinguishing mark of socialism
is that distribution would operate according to need,
rather than input … people will be able to walk into a
distribution point and pick up what they need.’

‘In a socialist society you would
expect workers to work in the way that they judge is
correct. Since a worker’s incentive under socialism is not
money, they work as best they can in order that they not
only fulfil what they are doing for the collectivity, but
for themselves. You would expect that they would work as
well as they can, without any need for discipline from
outside.’Read
>

1. No Basic Change

In June Swiss voters – they get the interesting
things to vote on – rejected a proposal to introduce a
basic income from the state for everyone as of right
whether they are working or not. Perhaps surprisingly,
only 23 percent voted for with an overwhelming 77 percent
against.

According to theTimes(6
June), critics denounced the proposal as a ‘Marxist
dream’. We don’t think Marx did dream of a basic income.
What he had in mind was the abolition of the wages system
and its replacement by ‘from each according to ability, to
each according to need’. This would mean that, after
cooperating to produce things and provide services, people
would have free access, without having to pay, to what
they needed to live and enjoy life.Read
>

July

2. Saving Private Capitalism

American capitalism is, apparently,
suffering a ‘crisis of faith’, at least according to a
5-page article featured on the front
cover of Time magazine (23 May). The author, Rana
Foroobar, quotes the findings of an opinion poll which she
finds ‘startling’:

‘… only 19% of Americans aged 18 to
29 identified themselves as “capitalists”. In the richest
and most market-oriented country in the world, only 42% of
that group said they “supported capitalism”. The numbers
were higher among older people; still, only 26% considered
themselves capitalists. A little over half supported the
system as a whole.’

One of the questions must have been
odd if it invited people to identify themselves as
‘capitalists’ in the same sort of way that they might have
been asked if they were socialists. A capitalist is not
someone who believes in capitalism. It is someone who has
enough capital to be able to live without being obliged
to sell their labour power for a living. In America that
will be well under 5 percent. Read
>

1. Crocodile Tears for the ‘Have-nots’

Commenting the day after the result of the vote for
Brexit, Times Economics Editor Philip Aldrick wrote:

‘Working class Britons have treated this momentous
referendum as a protest vote to register their anger with
globalisation, immigration and elitism’.

He was using ‘working class’ in the occupational
sense of manual and industrial workers whereas, in the
economic sense, it refers to all obliged by economic
necessity to try to sell their mental and physical
energies to an employer for a wage or a salary. In other
words, nearly everybody except for capitalists and other
rich people, making up well over 90 percent of the
population. Nearly half of these who took part in the
referendum voted for things to remain as they are. Read
>

August

2. Lies, Damned Lies and
Statistics

It is generally recognised that during the
referendum campaign the Brexit side relied on lies – about
how much Britain paid to the EU, about how the EU worked,
about Turkey being about to join – over and above the
usual empty promises of politicians as to how things would
be better if they won. The Remain side relied more on
misleading statistics.

In April the Treasury released a study purporting to
show that a ‘Vote to Leave would make British households
£4,300 worse off’ by 2030 (Independent, 18 April). The
Remain side immediately translated this into a poster
proclaiming ‘£4300 cost to UK families if Britain leaves
the EU’. This figure was misleading because it was based
on the assumption that Britain left the single market as
well as the EU institutions; which does not have to be,
and might well turn out not to be the case. Read
>

Negative Interest?

‘NatWest has become the first bank to warn business
customers it may charge negative interest rates on money
held in current accounts’, reported the Daily Telegraph (25
July). But how can there be negative interest rates? Why
would anyone lend money for a period only to get less back
at the end of it?

Interest is the price of borrowing money and is governed by
supply and demand, more by demand in fact. The rate of
interest (or, rather, rates as there are different ones
depending on the risk of non-repayment) reflects the state
of the economy. When business is slack, due to a lack of
enough profitable investment opportunities, the rate is low
because supply, as from companies not reinvesting profits,
is more than what other companies want to borrow. In times
of recovery and boom, when profit prospects are seen to be
good, it is the other way round. Demand exceeds supply
and the rate tends to rise. Read
>

September

Who Funded the Brexit Campaign?

After the EU referendum the Electoral Commission
released figures on the funds received by the two sides.
They showed that the Leave side spent about £17.6 million
and the Remain only £14.3 million. These were not
contributions from grass-roots supporters but, on both
sides, from individual capitalists. Since staying in the
EU, and especially the single market, was in the overall
interest of the majority section of the British capitalist
class, how come that capitalists gave more to Leave than
Remain? In fact, who were the capitalists who funded the
Leave campaign, and why?

What all these have in common (apart from most of them
appearing in the Sunday Times Rich List) is that they are
involved in hedge funds and other such financial
activities. Read
>

Dreaming of Ending Poverty

‘Ending poverty need not be a utopian dream’, was the headline of an article by Philip Collins in the Times
(2 September), subheaded ‘Thomas More’s vision of a perfect society may
be outlandish but it reminds us that Britain can change for the
better.’
This year is the 500th anniversary of the publication of More’s Utopia
in Latin. An English translation appeared in 1551. More did imagine a
regimented society with for instance, as Collins pointed out, everyone
having to dress the same. But it is not this aspect that has interested
socialists. It’s his imaging a society without private property where
there is planned production to meet needs and whose members have free
access to what they need ‘without money, without exchaunge, without any
gage, pawne, or pledge.’ Read >

October

Beyond Economics

This year is also the 50th anniversary of Star Trek.
Although not the main theme, or even a minor one, it is clear from the
characters’ behaviour and occasional asides (at least in the first two
series) that it’s a money-free world. Set in the 23rd and 24th
centuries, scarcity no longer exists as anything material needed to
meet human needs can be produced by ‘replicators’. This prompted one
trekkie, Manu Saadia, to write Trekonomics: the Economics of Star Trek that appeared earlier this year and which sparked a discussion on ‘post-scarcity economics’.
Actually, ’post-scarcity economics’ is a contradiction in terms as
academic economics defines itself as the study of how societies and
individuals allocate scarce resources. Read >

The Sinking Pound

‘Hard Brexit fears push sterling to a fresh
low’ read the headline in the Times (7 October)
reporting that the pound had fallen to its lowest level
against the dollar for 31 years. Others are suggesting
that it could eventually fall, ironically, to £1 = 1 Euro.
Until 1973 most of the world’s currencies were tied to a
fixed rate with the US dollar and so also to each other.
If a country wanted to change this it had to get the
agreement of the IMF. Governments tried to avoid such a
formal devaluation as this was regarded as a recognition
that they could not control the part of the capitalist
economy they presided over as they had claimed in order to
get elected. Read
>

November

John McDonnell Imagines

AT THE end of his speech to the Labour Party conference in
September, shadow chancellor John McDonnell offered a
definition of socialism. Invoking John Lennon he orated:

‘Imagine the society that we can create. It’s a society
that’s radically transformed, radically fairer, more equal
and more democratic. Yes, based upon a prosperous economy
but an economy that’s economically and environmentally
sustainable and where that prosperity is shared by all.
That’s our vision to rebuild and transform Britain. In
this party you no longer have to whisper it, it’s called
socialism.’

Evidently McDonnell hasn’t got much of an imagination as
this is something that politicians in the other parties
can, and do, subscribe to without calling it socialism.
They’re right. It isn’t. Read
>

Cashless but Not Profitless

‘Apple’s latest ambition is to rid the world of cash’ reads the
headline in the Times (20 October), reporting Apple’s chief executive,
Tim Cook, saying ‘we would like to be a catalyst for taking cash out of
the system.’ The prospect of a ‘cashless society’ has been held out
before. Apple’s plan is that people should use its smartphones to pay
for things instead of cash or a cheque or even a debit or credit card.
A cashless society is not the same as a moneyless society, for a
reason hinted at in a turn of phrase used by Christopher Burniske,
described as ‘an analyst of digital currency’:
‘Apple’s is building a payment structure where you can use all kinds of digital means to transfer value.’
Actually, transferring value is not a bad way of describing one of
the functions of money, that of being a means of exchanging values. Read >

December

Jack London Was Wrong

The writer Jack London died a hundred years ago last month. He is
more known for his adventure stories than for his economics but The Iron
Heel published in 1907 has a chapter ‘The Mathematics of a Dream’ in
which the hero, Ernest Everhard, sets out to ‘develop the inevitability
of the breakdown of the capitalist system’ and ‘demonstrate
mathematically why it must break down.’
Everhard summarises his argument:
‘We found that labour could buy back with its wages only so much of
the product, and that capital did not consume all of the remainder of
the product. We found that when labour had consumed to the full extent
of its wages, and when capital had consumed all it wanted, there was
still left an unconsumed surplus. We agreed that this surplus could only
be disposed of abroad. Read >